Debt monetization

rdf:langString Debt monetization

rdf:langString Debt monetization or monetary financing is the practice of a government borrowing money from the central bank to finance public spending instead of selling bonds to private investors or raising taxes. The central banks who buy government debt, are essentially creating new money in the process to do so. This practice is often informally and pejoratively called printing money or money creation. It is prohibited in many countries, because it is considered dangerous due to the risk of creating runaway inflation. To prevent inflation getting out of hand, central banks often keep a close eye on the Consumer Price Index, as to not create too much new money.